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Feb 24, 2012, 08.19 PM IST
CRISIL Research has come out with its report on Fortis Healthcare (India). The research firm has maintained the fundamental grade of 3/5 to the company in its February 20, 2012 report.
CRISIL Research has come out with its report on Fortis Healthcare (India) . The research firm has maintained the fundamental grade of 3/5 to the company in its February 20, 2012 report.
Fortis Healthcare (India) Ltd’s (Fortis’) Q3FY12 revenues and margins were below CRISIL Research’s expectations but earnings were above expectations. Revenues from the hospital business registered healthy y-o-y growth and were in line with our expectations but SRL’s revenues were below expectations. EBITDA margin declined due to low margins in the diagnostic business. Earnings registered strong growth due to higher other income. We continue to remain positive on Fortis given its leading position in the Indian healthcare industry and maintain the fundamental grade of 3/5. Factoring in delays in SRL ramp-up, we lower our revenue and margin estimates but raise earnings estimates due to estimated higher other income on loans to group companies.
Q3FY12 result analysis
• EBITDA margin declined by ~75 bps y-o-y to 13.8% as margin expansion in the existing hospitals was offset by a decline in the diagnostic business’ margins. The hospital business reported margin of 15.4% (up ~80 bps y-o-y and 40 bps q-o-q). The diagnostic business reported margin of 7.7%, down ~400 bps due to one-time start-up expense of Rs 36.6 mn.
• PAT declined 15.2% y-o-y due to lower EBITDA margins and higher interest costs. On a q-o-q basis, Fortis reported profit of Rs 293 mn vs. net loss of Rs 36 mn in Q2FY12 on account of high other income. Fortis has advanced Rs 6 bn loan in Q2FY12, which was returned along with Rs 400 mn interest in Q3FY12. The company has further invested this amount in an intercorporate deposit of group companies.
Earnings estimates – revised upwards
Valuations: Current market price is aligned
Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.
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